(Written by Liz Alderman)
Raquel Navarro downed an early morning coffee, kissed her husband goodbye and hurried from her family’s spacious brick home in a suburb north of the Spanish capital.
The successful events business she had owned for a decade slowly crumbled when Europe’s financial crisis hit. Now, after dropping her two young children at school, she boarded the subway to her desperately needed job as a secretary, working for just above minimum wage.
Moments later, her husband, José Enrique Alvarez, walked out the door to a charcuterie where he is a self-employed butcher. The 56-year-old was once the human resources director of a Spanish plant nursery that downsized, laying off him and half the company’s 300 workers in 12 months.
After decades of living comfortably in Spain’s upper middle class, the middle-aged couple are struggling with their decline. Spain’s economy, like the rest of Europe’s, is growing faster than before the 2008 financial crisis and creating jobs. But the work they could find pays a fraction of the combined 80,000-euro annual income they once earned.
By summer, they figure they will no longer be able to pay their mortgage.
“We’re people who had worked our way up, and now we’re tumbling down,” Navarro said, as tears sprang to her eyes. “The economy seems to be improving, but we’re not benefiting.”
It is a precarious situation felt by millions of Europeans.
Since the recession of the late 2000s, the middle class has shrunk in over two-thirds of the European Union, echoing a similar decline in the United States and reversing two decades of expansion. While middle-class households are more prevalent in Europe than in the United States — around 60 per cent, compared with just over 50 per cent in America — they face unprecedented levels of vulnerability.
For people in this group, whom economists define as earning between two-thirds and double their country’s median income, the risk of falling down the economic ladder is greater than their chances of moving up.
“The progress of the middle class has halted in most European countries,” said Daniel Vaughan-Whitehead, a senior economist at the International Labor Organization in Geneva. “Their situation has become more unstable, and if something happens in the household, they are more likely to go down and stay down.”
The hurdles to keeping their status, or recovering lost ground, are higher given post-recession labor dynamics. The loss of middle-income jobs, weakened social protections and skill mismatches have reduced economic mobility and widened income inequality. Automation and globalization are deepening the divides.
Europe’s social safety nets have traditionally offered protection, but even these are being reduced as deficit-reduction policies required by the European Union kick in. That unraveling, in part, explains the populist discontent in Europe.
“Politicians haven’t created measures to help those of us in the middle get back on our feet, and we’re a big group,” said Navarro, her frustration clear.
“What happened to me has happened to many people I know,” she said, citing friends and neighbors who have confided their woes. “When we get together, we call ourselves ‘los invisibles’ — the invisibles,” she added. “We are the forgotten ones.”
Once seen as a model
In Spain, it seems as if this should not be happening. The country was feted by European policymakers as a model for the recovery, having tightened its belt to exit a deep recession. An overhaul, which included sweeping labor law changes in 2012 that gave employers more flexibility to fire and hire, helped revive the economy.
Spain’s economy grew faster than those of France and Germany last year, at a 3 per cent annual pace. Unemployment fell last month to 14.4 per cent, the lowest in a decade and down from a staggering 27 per cent in 2013.
But interviews with over a dozen workers revealed a deep-seated disillusionment with the recovery and the quality of jobs emerging from it.
The changes in labor laws weakened job protections as well as earnings. With millions looking for work, employers could offer lower salaries, making it harder for people to regain or maintain living standards.
Navarro and her husband were among the better off. With degrees in law, management and business, she owned the events promotion company, employing around 50 people on and off for projects.
In 2006, some of her clients suddenly stopped paying. Two years later, as the financial crisis hit, she had to close shop. She found a managerial job at a nonprofit foundation that paid 2,500 euros a month, less than before but enough to help maintain the family’s lifestyle.
Then the foundation went under in 2012 — the same year the labor legislation went into force. Navarro could not find a new job. Because the foundation had required her to register as self-employed, a tactic that allows employers to avoid paying high social taxes, she received no unemployment compensation.
Her husband lost his job the same year and collected unemployment benefits as he looked for work. He eventually took over a charcuterie stand once owned by Navarro’s father in a dimly lit produce market, becoming self-employed. But his sales are down because other Spaniards, too, are economizing. Alvarez now earns 1,000 euros a month but, after taxes and social security, takes home only about a third of that.
Navarro spent several years sending out a stream of résumés, to no avail, while also caring full time for her two grade-school children and an older daughter. “It wasn’t just difficult, it was almost impossible,” she said. “I got not one single interview.”
Finally, she was hired in 2017 for 1,200 euros a month at a trade association for entrepreneurs and small businesses. Though a secretary in title and in pay, she spends most of her time providing legal advice to struggling business owners.
With their lower incomes, the couple are straining to pay household bills. Navarro said she didn’t know what she’d do when their savings dried up in a few months.
“My father taught me to work hard, but he didn’t teach me that life can just cut you down,” she said.
The gap between people slipping toward the bottom and those at the top shows no sign of narrowing. Wealth divisions between Europe’s lower- and middle-income families and upper-income households are at a record high, according to the Organization for Economic Cooperation and Development.
The median income for middle-class families also fell, especially in Southern Europe, eroding purchasing power and feeding discontent that has driven populist protests like the Yellow Vest movement in France. Political polarization is growing in Spain, where Vox, a right-wing nationalist party, recently won parliamentary seats in Andalusia, the country’s biggest region.
Prime Minister Pedro Sánchez has taken heed. The Socialist leader grabbed power last summer with the fragile backing of Podemos, the left-wing anti-austerity party. Warning of middle-class frustrations, his embattled government ordered a 22 per cent rise in the minimum wage in January, and has vowed to reverse some labor laws, increase social spending and raise taxes on companies and the rich. Spanish lawmakers rejected his budget on Wednesday, however, and Sánchez is now facing the prospect of calling new elections.
For David Jiménez and his partner, Raquel Murillo, the prime minister’s efforts appeal to a sense of injustice. They recently moved to a tiny rental apartment in Madrid’s outskirts. The couple’s finances have worn dangerously thin after Jiménez, 45, lost his job in 2017 as a senior electrician at the carmaker PSA Peugeot Citroën.
Over 24 years, he rose from the factory floor to become a quality control supervisor, netting 1,600 euros a month. Murillo, 47, earned 2,000 euros a month as a vocational teacher. The couple were able to afford to live in a trendy Madrid neighborhood for nine years.
Then Jiménez, who had expected a promotion, learned his job was on the line. Labor law changes had made it easier for employers to shed workers when profits fell; Peugeot Citroën decided to cut over 400 permanent jobs, he said.
Jiménez learned he was being reassigned to the factory floor. “It was completely demoralizing,” he said. “I felt like I’d been discarded.” He ended up negotiating a buyout.
Unemployment benefits keep the couple afloat. But that state money, with budget cuts, now lasts 18 months, down from 24.
“I’ll take any kind of job,” Jiménez said. “What’s clear is that whatever I get next won’t be as well paid as what I was doing before.”
While some workers can find jobs with equal or better pay, those with intermediate skills are more vulnerable.
“They might get back into a worse type of employment, and find themselves out of pocket due to reduced earnings,” said Stefano Scarpetta, the director for employment, labor and social affairs at the Organization for Economic Cooperation and Development. “It gets much harder to be a part of the middle class.”
Work contracts that last hours
Young people face steeper hurdles. For the first time, a generation of European youths can’t envision living the middle-class lives of their parents. They face a dearth of stable jobs and a rise in temporary and part-time contracts that slice work into weeks, days and hours.
When used as intended — to offer experience — these contracts can lead to steady work and better incomes.
But companies and Europe’s public sector have mostly used them to dodge protections for permanent employees. In Spain alone, 90 per cent of new jobs in 2017 were temporary; a third lasted less than a week, according to Caritas, a social support organization.
Javier Lopez, 30, supervises baggage handlers at Madrid’s Barajas Airport who work on contracts of two to eight hours. In summer, interns work three months unpaid, learning how to move suitcases, he said.
Lopez is one of the lucky ones: he has a full-time job with an airport subcontractor, earning 1,000 euros a month. But his salary doesn’t cover his 800 euro rent and other living costs since his wife, a flight attendant at a discount airline, went on maternity leave. So Lopez is taking the Kafkaesque step of training for a second job as one of the part-time baggage handlers he oversees.
“When I end my shift supervising these people,” he said, “I’ll become one of them.”